Manchester City announce staggering losses of £194m
Manchester City have announced record annual losses of £194.9million.
The colossal sum, the highest ever recorded in English football, shows the depth of the investment made by Sheikh Mansour to transform City from a lower-mid table outfit in 2008 to their present status as Premier League leaders.
Whilst accepting the vast scale of the losses, City officials are adamant it marks a low point in their financial graph and from this point forward, they will be embarking on a significant upward trend.
"Our losses, which we predicted as part of our accelerated investment strategy, will not be repeated on this scale in the future," said chief operating officer Graham Wallace.
Thankfully for City, the figures will not be taken into account used as part of UEFA's Financial Fair Play regulations as they fall outside the accounting window.
Indeed, as "additional exceptional charges" of £34.4million have been added to a net loss of £160.5million for the 2010-11 financial year, it could be argued the club have been quite astute in their planning.
It is also easy to see why the club are so strong in defending their present position as the mammoth sponsorship deal with Etihad Airlines, said to be worth £35million-a-year over the next decade, plus the riches on offer in this season's Champions League, will have begun to impact on City's accounts in 12 months' time.
The Blues are also pointing out that commercial revenue has risen 49.7% to £48.5million and TV rights, thanks to the club's third place Premier League finish, winning the FA Cup to end a 35-year trophy drought and a run to the last 16 of the Europa League, have increased 27.4% to £68.8million.
Overall turnover was £153.2million, breaking through the £150million barrier for the first time.
"The result is consistent with the guidance provided in the first MCFC annual report that losses would peak in the 2010-11 financial year, as a result of the accelerated investment programme that the club undertook between 2008 and 2011," said the club in a statement to accompany the results.
Although officials are aware of the likelihood of all the focus going on the eye-bulging headline figure, which has been covered by two tranches of new equity of £176.7million during 2010-11 and £114.2million in the post-year period, they are insistent the losses should be taken in context with the club's position as a whole.
In spending huge amounts on Roberto Mancini's playing squad, the Blues have been left with a number of players, including Emmanuel Adebayor, Roque Santa Cruz and Wayne Bridge, who are of no real value to City now but still have to be paid, money which rolls into a seven-figure sum every month.
Only now do City believe they have got to the situation required for a leading club of having two men for each position.
And, given most of Mancini's players are young, vast recruitment drives such as those which have been seen so often over the past three years, will not be necessary.
There is a clear desire to develop in some areas, particularly in overseas markets where Manchester United have been so strong, but City have no plans to extend the newly-named Etihad Stadium currently.
However, over the road, it is hoped planning permission to start work on the vast 80 acre site that will be known as the Etihad Campus will be granted in December.
City have received a favourable response to their ambitious scheme, the like of which has never been seen before in England, from local residents, who are set to benefit from 85 permanent and 200 temporary jobs within the project as a whole.
It is this scheme which the club feel will prove Etihad's £350million investment worthwhile.
In fact, Press Association Sport understands there is a feeling at City that the price tag may eventually be viewed as undervaluing the site rather than inflating it, as Arsene Wenger and Liverpool managing director Ian Ayre have suggested.
It will also be used as evidence of Sheikh Mansour's long-term commitment for City to become profitable should the club eventually fail to meet UEFA's FFP ruling that no club can incur losses in excess of 45million euros (£40million) over the two seasons of the first monitoring period, which begins in the 2011-12 campaign.
"Look at the companies Sheikh Mansour has invested in," a City official told Press Association Sport.
"He simply does not take on failing businesses.
"He wants Manchester City to be as financially sustainable as possible. That has always been the situation."
"With our best ever result in the Premier League, qualification for the UEFA Champions League, and an historic FA Cup campaign that delivered the Club its first piece of major silverware in 35 years, there is much to be proud of," said chairman Khaldoon al-Mubarak.
"However, we should not underestimate the club's other major achievements in terms of its continued commercial performance, groundbreaking partnership initiatives, expanding contribution to the community, and independent recognition for the quality of our facilities and match day offerings.
"From the perspective of the board and executive leadership team, these broader achievements are equally important signs of progress in the ongoing evolution of Manchester City and are particularly encouraging when combined with the club's historic performance on the pitch.
"It is important to recognise that much of the work covered in this report occurred under the stewardship of Garry Cook.
"I want to take this opportunity to formally thank him for his contribution to the extensive transformation of the organisation.
"Now that we are witnessing progress, both on and off the pitch, it is more important than ever to redouble our efforts towards achieving our ambition to establish Manchester City as a more successful, sustainable and internationally competitive football club that remains at the heart of the community in which it is based."
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